POLITICAL AND BUSINESS ENVIRONMENT
The year was marked by relative political stability; however, in the last quarter of the year, the medical vacation undertaken by
President Umaru Musa Yar'Adua - without the necessary notice to the National Assembly and empowering the Vice-President as Acting President - generated tension in the polity. This led to a slow-down in the economic environment as major legislative
Initiatives of the Government such as the Asset Management Company of Nigeria (AMCO) Bill and the Petroleum Industry
Bill were stalled. The non-passage of the AMCO Bill meant that the financial sector - especially credit to the private sector -
remained constrained thereby limiting the circulation of money and, hence, affecting business performance. Also, the
much anticipated deregulation of the downstream sector suffered a setback, creating an avenue for speculators to cause
artificial scarcity with the resultant high cost of fuel and attendant increase in cost ofbusiness operations generally.
The Federal Government recorded a major breakthrough in the crises in the Niger Delta with the amnesty deal. The move
helped to restore peace to the region and increased the level of confidence of the international oil community in our
country. Unfortunately, the slow pace of the implementation of the programme - perhaps, also due to the absence of the
President - led to the resurgence of anxiety and tension in the region towards the end of the year.
The Global financial crises, which started in 2007, reached its climax in 2009 with the crash of the global stock markets
and failure of several banks, which led to government interventions to recapitalise the financial system. The Nigerian
Stock Exchange also experienced huge stock price fall in 2009 with the All Share Index dropping by over 33%. This triggered
loss of investors' confidence and subsequent liquidity crisis in the Nigerian economy. The Central Bank of Nigeria (CBN) and the Nigerian Deposit Insurance Corporation (NDIC) also took measures to clean up the banking sector. The various
developments in the financial sector resulted in a credit squeeze in the economy, which adversely affected our real estate,
motors, and restaurants businesses.
The overall GDP growth was estimated at 6.9% with the non-oil sector as the key driver of growth in 2009. Inflation declined from 14% in January to about 12% by December 2009. The price of crude oil rose considerably from $39.85 to close to $80 per barrel at the end of the year. This gave an average of US $63.1 per barrel through 2009 against the budgeted price of US $45 and compensated for the shortfall in government revenue from other sources. CBN's average Exchange rate was N147.33 to US $1. Overall, these indicators signalled recovery of the Nigerian economy towards the end of 2009, but came in too late for any material impact on business.
There was no significant improvement in the poor state of infrastructure including power during the year. Despite government's efforts, only an average of 3,500 megawatts was reportedly achieved as opposed to the target of 6,000 megawatts. The crisis in the Nigerian energy sector has constituted a hindrance to socio-economic transformation and, consequently, capacity utilization in the manufacturing sector. These developments impacted adversely on our businesses, especially in our Restaurants and Dairies businesses which recorded significant increases in costs due to poor power supply.
COMPANY PERFORMANCE
Despite the difficult business environment that characterised 2009, the Group recorded a Turnover of N56.5 billion, a growth of 5% over 2008. However, as a result of significant increase in operating cost, Operating Profit Before Tax and Non-Controlling interest stood at N8.08 billion against N8.85 billion posted in 2008 with Profit After Tax and Non-Controlling Interest at N4.02 billion during the period under review.
DIVIDEND AND BONUS ISSUE
In view of the overall result, the Board of Directors recommends for your consideration and approval
the sum of N1,664,749,135.40 to be paid out as dividend for 2009. This amount translates to N1.30 for every 50k share held, subject to the deduction of appropriate withholding tax at the time of payment. A bonus issue of one (1) ordinary share for
every four (4) ordinary shares held is also recommended for your approval.
BOARD CHANGES
I would like to state that since the last Annual General Meeting, there have been some changes on the Board of Directors of your company. Lt.-General Mohammed I. Wushish
(rtd) has voluntarily retired as Chairman of the Board upon attaining the retirement age of 70 years. Mr. Olayiwola Adetunji Adetomiwa has also retired from the Company after
over thirty years of meritorious service. Please join me in thanking both of them for their invaluable contributions and services to the progress and profitability of the Company during their tenure. I wish them well in their retirement.
I am pleased to inform you that some new Directors with solid credentials, diverse skills and varied experiences have also joined the Board. They are Mrs Awuneba Ajumogobia and Dr. Suleyman. A. Ndanusa as non-executive directors and Messrs. Abdul. A. Bello and Joseph. I. D. Dada as executive directors. On your behalf, I warmly welcome them to the Board. Finally, I was appointed by the Board of Directors to succeed Lt. General Wushishi (rtd) as the Chairman of the Board with effect from the 2nd of January 2010.
LOOKING AHEAD
Although the global economic meltdown and stock market crash appears to be receding, it seems we are still in for tough times due to the prevailing credit, cash and liquidity crunch. The Asset Management Company, proposed by the CBN to manage the toxic assets of troubled banks and enhance flow of credit to the real sector, is yet to takeoff.
Prompt implementation of the programme holds the key to the restoration of capital and loanable funds to the banking system and, by extension, the revival of credit to the
private sector.
The improvement in crude oil prices is certainly good for Nigeria's macroeconomic calculations. If this trend is maintained for the year, it will be capable of reflating the
economy due to increased earnings and subsequent increased spending by government. These developments are expected to impact positively on businesses as there will be
increased liquidity, consumption and investments in the economy. We hope that this outlook may also encourage banks to resume lending. As a direct result, disposable income in the hands of consumers and purchasing power should increase.
We are already positioning our businesses to benefit from this upside as we plan to introduce some new products through UAC Foods and UAC Dairies. We also plan to position
MDS Logistics for growth and to expand the capacity of the Fish Feed mill in Grand Cereals Limited. In addition, we intend to take advantage of the N200 billion Government's special intervention fund aimed at providing credit facilities for commercial farming and agro-processing linkages in the economy. Our Restaurants business will be reviewed
and strengthened for improved efficiencies and we will continue to seek and implement cost optimisation and cost reduction strategies throughout all our businesses.
APPRECIATION
Distinguished ladies and gentlemen, let me use this opportunity to express our sincere gratitude to the management and staff for their unwavering commitment to the
Company. Our sincere appreciation also goes to our shareholders, customers, dealers, distributors, suppliers and other stakeholders for their continued support.
Thank you.
SENATOR UDOMA UDO UDOMA
Chairman
|
